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Anarchy Q & A

Randy poses a few interesting questions for me, as does Rodrik in his last remarks. I’ll do my best to answer them:

Q:Pete, do you think that if Somalia remains in its stateless condition that it will emerge from poverty to prosperity?

A: I think that the greatest sources of instability and retrogression Somalia has experienced since going stateless in 1991 are the few exogenously-created attempts, backed by the international community, to reinstate government in the country. The first of these was the “Transitional National Government.” The second was the “Transitional Federal Government.” Despite these interjections, internally, Somalia has proved a remarkably stable anarchy, whereby the power of various groups that might be interested in asserting their overarching control of the country is checked by the power of competing groups. Instead of this leading to conflict, it has mostly led to peace. When the TNG, and later TFG, lodged itself in the picture, this power equilibrium was disturbed, which led to renewed conflict.

If Somali anarchy were “left alone” would it emerge from poverty to prosperity? I don’t know, but part of the main point in my original essay was that this is the wrong question to be asking.

I think that for the foreseeable future the question for Somalia is one of anarchy as we understand this anarchy to be in Somalia—not in an idealized form of perfect private order like we read in David Friedman’s Machinery of Freedom—vs. a highly-predatory and dysfunctional government like the one Somalia had before 1991—not an idealized form of property-protecting government like we see in the U.S. Neither of these particular states of the world generate lots of prosperity. But the evidence from Somalia suggests to me that the former generates more prosperity than the latter.

Just like there are different “kinds” of governments, I believe there are also different “kinds” of anarchies. Some will be more high-functioning than others and many factors, such as a society’s level of development, culture, history, etc., will constrain what kind of anarchy it might get if it were to go this route just like these features constrain what kind of government it can expect if it goes this route instead. The situation of Somalia suggests to me that even the “worse kinds” of anarchy are better than the “worse kinds” of government. Given the choice between the two, which is the choice I think Somalia has, the former is superior. I am not saying that Somalia is the “worst kind” of anarchy; I simply haven’t seen enough cases of anarchy to know if this is the case or not. But I do know it’s not the “best kind,” if for no other reason than the fact that I think the international arena, for example, shows a “better kind.”

Rodrik asks what my advice would be for Somalia. It would indeed be to leave Somalia alone because I think the alternative that Rodrik suggests—trying to construct a Botswana-like government in Somalia—will not only fail, but will likely produce worse outcomes that just letting Somalia be. The reason for this is the same one I pointed to in my initial essay. Somalia and Botswana face very different constraints, which in turn dramatically affects the types of government they could have.

Botswana has a long history of constraining rulers—going back to the precolonial period—which have carried forward to today. Botswana is also a veritable diamond mine, which has largely operated to preserve the historically-grounded good institutions it has enjoyed. Somalia, in contrast, has no such history of constraints, has experienced political corruption and predation from the time of its independence, and has no diamonds to speak of. If Botswana’s path is replicable, it’s not replicable in Somalia. An attempt to make Somalia look like Botswana won’t produce another Botswana. It will produce another Barre-ruled Somalia.

Q:Do you think there is any practical way to eliminate governments in those areas that have bad governments, and actually leave them stateless?

A: I don’t believe there is an effective way to exogenously “engineer” anarchy in foreign countries for the same reason I don’t believe there is an effective way to exogenously “engineer” good governments in developing countries. The track record for foreign aid looks pretty poor from where I sit, and there is no reason to think that attempts to “create anarchy” abroad would be any better. Incentive and information problems plague both efforts equally.

Q:If you had the option of completely eliminating government in the United States, relying entirely on voluntary agreements, would you do it?

A: If the readers of this exchange were not already fully prepared to have me committed, I will give them the reason to do so now: Yes, I would be in favor of what you propose.

I think that the “better kind” of anarchy is actually most likely to flourish in a highly-developed society with a history like the one the U.S. has. Randy and Rodrik have both pointed out, and I think rightly, that we do not have any examples of countries (if we exclude the international arena, which is of course not a country) that have become wealthy through anarchy. Although I agree with this, I do not think it demonstrates what those who invoke it usually think it does. It does not follow from this, for example, that anarchy is antithetical to prosperity and that government alone is capable of producing wealthy societies.

We often forget that until a good way into the 19th century, even England and the United States were very much reliant on private arrangements for traditional public functions, such as providing law and order. As we moved along, government grew stronger and bigger and largely supplanted these private arrangements. But this does not mean that these places could not have grown wealthy on the basis of private arrangements if they had been permitted to. Only someone who is fully committed to the “Pigouvian perspective,” who thinks about the evolution of government purely in terms of rectifying market inefficiencies and serving the “public interest,” could conclude as much. Students of public choice will be ready to point out that government’s growth and usurpation of private arrangements historically is not evidence that this was efficient or that government is responsible the growth we have observed since then.

In my mind, the “anarchy path,” which would have involved government shrinking at this critical junction in U.S. or British history, for example, is one of a few paths—including the one we did take—that could have been taken and generated prosperity. In fact, I would argue along with Bruce that the anarchy path would have generated greater prosperity than what we have today under government.

Q:The difficult thing about contemplating orderly anarchy in a prosperous society is that it is so far away from anything ever experienced … What do you think, Pete?

A: I think that it’s closer than we sometimes pretend. I live in Arlington, VA. There are quite a few police active around here and lots of government buildings. Nevertheless, not too long ago, right in front of the cigar shop I spend my copious free time in, no more than 15 feet from my face, in broad daylight, I saw a man walk up to a car parked in front of the shop, break out the window and walk away with a laptop computer.

Contrary to what you might be thinking right now, I am not raising this example to suggest that this theft means we’re not as far from anarchy as we think. I’m raising this example to suggest that this theft, despite the strong presence of government enforcement, means that we’re not as far from anarchy as we think.

Like it or not, most of the time, despite its hypothetical presence, government isn’t there to protect us. Yes, it’s true, you can call the police if your computer is stolen. But this did not prevent the theft, which, ostensibly, is the great benefit of state enforcement. Nor do I suspect that the poor fellow who was victimized, who did in fact file a report with the police, will ever see his computer again because of this.

I know, I know, shadow of the state and all that … We’d see more computers stolen if it weren’t for government police, and so on … But my point is that when you buy an alarm for your house, when you encrypt the password on your computer, when you hire a “rent-a-cop” or use private arbitration, when you so much as lock your door when you leave in the morning, you’re telling me something. And that something is that government is not as bullet-proof (or cost-effective) a remedy for protecting your property as we often pretend it is. People evidently feel the need to resort to private methods of property protection, which suggests the presence of a rather large “formal enforcement vacuum”—a sizeable arena of our daily lives in which government cannot be relied upon to protect us. Well, that’s anarchy.

Also from this issue

Lead Essay

Everybody seems to know we need government … But pirates didn’t! How did they manage without the state? In this issue’s thought-provoking lead essay, Peter T. Leeson, the BB&T Professor for the Study of Capitalism at George Mason University, explores what pirate “constitutions,” credit institutions among 19th century African bandit traders, and the well-being of Somalians after the collapse of the Somalian state have to tell us about the possibility of practical anarchy. It works better than you think, Leeson concludes. “As long as there are unrealized gains to realize, people will find ways to realize them” — state or no state.

Response Essays

Bruce L. Benson, author of The Enterprise of Law: Justice Without the State, argues Peter Leeson’s defense of anarchy is too moderate. Governments in developed nations, Benson maintains, are not better than ordered anarchy. Drawing on Franz Oppenheimer’s classic account of the state as a protection racket, Benson argues that the state only seems necessary because it offers “solutions” to problems the state itself creates. Benson claims that even well-constrained states are essentially parasitic, leading him to conclude that “even when a relatively ‘good’ government exists, there still is way too much government and not nearly enough anarchy.”

Harvard economist Dani Rodrik is willing to accept a number of steps in Peter Leeson’s argument for anarchy, “but [Leeson’s] bottom line … represents a huge leap of faith.” Citing the work of several important thinkers, Rodrik argues that “the problem with self-enforcing agreements is that they do not scale up.” Both theory and data show that complex, well-functioning social and economic systems require the enforcement of rules by government. “Those societies in which markets work best are the ones where the reach of the state is longer, not shorter.”

Florida State University economist Randall Holcombe argues that even if Leeson is right about anarchy, it doesn’t much matter. “Regardless of its merits,” Holcombe writes, “anarchy has no prospect as an actual policy option.” The bottom line is that government is popular in developed nations. Furthermore, anarchy may not be a “stable equilibrium,” in which case it might “coalesce into governments … potentially more oppressive and more destructive than those we see in prosperous areas today.” According to Holcombe, if we’re going to get a government anyway, the best approach to policy is to “make it smaller, less intrusive, and more libertarian,” not to make it go away.

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